More patent litigation reform is effectively dead for this year

Over the past year, intellectual property reform advocates in Congress have been trying to advance legislation to crack down on patent trolls. But, that process may ground to a halt, after Senator Pat Leahy, chairman of the Senate Judiciary Committee, abruptly pulled the “Patent Transparency and Improvements Act” from the Senate agenda.

The Senate Judiciary Committee had been working long and hard to reach an agreement on changes to the bill aimed at reducing patent litigation caused by patent trolls, but Senator Leahy said he is shelving a patent bill because the two sides could not compromise to prevent patent litigation abuse without punishing innovators.

He told The Chicago Tribune, "Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate Judiciary Committee agenda," Leahy said in a statement. "If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the committee.”

The bill has support from companies including Google and Cisco, as well as some retailers, still, critics worry that efforts to rein in unwarranted patent infringement lawsuits could hurt companies looking to protect intellectual property.

I recently sat down with Morrison & Foerster Patent and Trade Secret Trial Lawyer Colette Verkuil who shed some important light on this news. According to Verkuil, the tabling of troll legislation means that more sweeping patent litigation reform is effectively dead for this year, and other, smaller bills are still percolating in Congress.

“The reports have credited the final tabling of the legislation to last minute lobbying efforts. Whether or not that is true, the speed with which this round of patent reform had moved through the House and was moving through the Senate far outpaced prior reform efforts,” she explained. “I think people realized that there was potential collateral damage from the reform that had not been thought through, and that led the Senate to take a breather.”

Verkuil says that because of the asymmetries in the cost and burden of discovery between a troll and a typical troll target defendants, trolls can use litigation to extract higher payments from the technology company than that company would otherwise pay in a free market without the artificial construct of a desire to avoid the costs of discovery.

“Historically, the definition of a troll has been a nettly issue,” she added.

Verkuil’s advice is to exclude universities and other companies that perform research and development, but do not practice their technology. She said, “Ultimately, the individual states that have been tackling patent reform have needed to find ways to avoid ensnaring legitimate patent holders in their legislation aimed at trolls.”